Type 2 diabetes mellitus (T2DM) is a multifactorial metabolic disease that produces significant and life-threatening complications for patients. Novel therapeutic treatments for T2DM are desperately needed to tackle this issue. Through its established roles in glucose homeostasis, AMP-activated protein kinase (AMPK), specifically complexes containing the γ3 regulatory isoform found exclusively in skeletal muscle, needs validation as a promising therapeutic target for T2DM. However, the lack of structural and functional information on this isoform has hindered the drug development. This study aimed to characterize the function and regulatory roles of a unique, 168 residue NH2-terminal extension (NTE) in the AMPK γ3 subunit. Loss of the entire NTE produced a significant increase in AMPK α2β2γ3 basal activity without affecting activation by upstream kinases. This inhibitory region was mapped to a region located between g3 residues Thr-130 and Pro-168. Using complimentary techniques, the isolated NTE was found to directly interact with the kinase domain in the AMPK α2 subunit. A novel phosphorylation site, Ser-14 within the g3-NTE, was found to be both autophosphorylated and a substrate for alternate upstream kinases, therefore suggesting that the NTE can bind to the substrate-binding site on the α subunit kinase domain. These findings provide valuable information to inform on g3-NTE functions and instigate the groundwork to develop novel T2DM therapies targeting AMPK in skeletal muscle, a tissue heavily implicated in appropriate glucose handling.